FHA Down Payment Assistance Program | Down Payment FHA Loan
What is the Down Payment Assistance Program?
- The Down Payment Assistance Program for FHA loans is 3% or 4% of the 1st mortgage total loan amount with no repayment required.
- The Within Reach FHA Down Payment Assistance Grant is designed to increase homeownership opportunities, which the grant can be used for the down payment on a home and closing costs.
- The down payment for an FHA loan without the grant is 3.5% for 580 FICO credit score or higher and 10% for under 580 FICO credit score.
Down Payment Assistance Grant Overview
- Down payment assistance program is intended to help families who demonstrated financial stability
- Financial stability is demonstrated by stable employment, income, managing finances, responsible repayment patterns, and satisfactory credit history
- Intended to help families or individuals who have been unable to save a sufficient amount for a down payment and ready for the next step to home ownership
- Seller credit of up to 6% is allowed
- Gift funds are allowed
- Borrower not required to be a First Time Homebuyer
- Also have a Within Reach Conventional Loan Down Payment Assistance Program – no repayment
Loan Types and Terms For the Down Payment Assistance Program
- 30 year fixed term, fully amortized
- 203(b) within accordance of the FHA guidelines
- 1-4 units
- Manufactured housing eligible under the FHA Manufactured Home Within Reach Program – no repayment
Borrower Qualifications
- Occupy the property as a primary residence
- Non-occupying co-borrowers or cosigners are not allowed
- Limit on income of 140% of Area Median Income or maximum allowed by FHA
- Borrowers with new employment with previous two years education need 6 months on the job for standard salary positions and 12 months for variable income
- Chapter 13 bankruptcy must be fully discharged before eligible for financing
- Must take a simple and easy to use homebuyers education course
Credit Requirements for the FHA Down Payment Assistance Grant
Nationwide Mortgage & Realty, LLC has loan programs that will go lower on credit score and more lenient on guidelines. The FHA Within Reach Grant has different guidelines than a regular FHA loan with no grants. The regular down payment for an FHA loan is a 3.5%.
Greater or equal to 620 FICO with an Automated Underwriting System (AUS) Approval:
- Max debt-to-income is 50%
- 12 month history of housing is required, but living rent free is acceptable
Greater or equal to 620 FICO with a AUS Refer/Eligible findings and Manual Underwriting:
- Max debt-to-income of 47% with one compensating factor being met
- 12 month history of housing required, but living rent free is ok
Greater or equal to 680 FICO with AUS Refer/Eligible findings and a manual underwrite:
- Applies to borrowers with debt-to-income being 47.01% to 50.00% with at least a 680 credit score
- 2 compensating factors must be met
Compensating Factors for FHA Down Payment Assistance
- Cash reserves equal two or exceeding 3 months total for 1-2 units and 6 months for 3-4 units
- Minimal increase in housing payment
- Residual income